Largest Hedge Fund Founder on Why U.S. Is on Brink of Economic ‘Heart Attack’
The United States is currently in a “death spiral” of debt that could lead to an economic “heart attack” if both parties do not work together to start cutting immediately, according to Ray Dalio, the founder of the world’s largest hedge fund.
During a recent conversation on “The All-In Podcast” with co-host David Friedberg, Dalio noted that a “death spiral” typically refers to when a company or government has too much debt and must borrow to service it. According to Dalio, investors are acutely aware of this, which is causing credit to get worse and interest rates to increase.
Dalio, the Chief investment officer of Bridgewater Associates, says this is the worst thing that can happen to a heavily indebted entity. He notes that the key question is whether the debt creates a large enough income to mitigate this issue.
“That’s like, I don’t know, eating vegetables or something. It’s a healthy process. And if not, credit begins to build up this debt, it begins to become like plaque in the arteries. And you can measure it just like you could measure it in the arteries, and you can see how it constricts that circulatory system,” Dalio told “All-In.”
If interest and debt service continuously constrict a government’s money supply, Dalio claims this can lead to an “economic debt heart attack.” (Read more from “Largest Hedge Fund Founder on Why U.S. Is on Brink of Economic ‘Heart Attack’” HERE)
